Senate falls short on bid to kill tax breaks for Big Oil

WASHINGTON — Senate Democrats tried Tuesday to channel public anger at $4 a gallon gasoline into passing a bill to repeal federal tax breaks and subsidies for five major oil companies, but they fell short.

After bashing Big Oil in a hearing last week, Senate Democrats mustered fewer than the 60 votes they needed under Senate rules to move the bill to a final vote. The final count was 52 to 48. Three Democrats - Sens. Mary Landrieu of Louisiana, Mark Begich of Alaska and Ben Nelson of Nebraska - voted against the measure. Only two Republicans - Maine Sens. Olympia Snowe and Susan Collins - voted for the bill.

Tuesday's action effectively kills the bill, which framed symbolically the different strategies that congressional Democrats and Republicans prefer for reducing budget deficits, confronting energy-policy choices and appealing for voters' favor.

Striking a populist pose, Democrats argued that Big Oil has huge profits and doesn't need tax breaks, even though ending them wouldn't cut deficits much. The Big Five oil companies' profits totaled about $35 billion in this year's first quarter. Ending their tax breaks would cost them about $21 billion over 10 years. The federal budget deficit is projected to be about $1.4 trillion this year, and about $7 trillion over 10 years.

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"Everyone in this chamber: Are you on the side of working-class families or are you on the side of Big Oil?" said Sen. Robert Menendez, D-N.J., who authored the bill. "There are lots of ways to cut the deficit. Many in the other body (the House of Representatives), they want to end Medicare and cut student loan programs. What I and my co-sponsors want to do is end wasteful oil tax breaks for a wealthy industry that does not need them."

Republicans said the breaks spur domestic oil production. They prefer to cut other spending, such as Medicare and Medicaid, whose sky-rocketing costs fuel much of projected future federal deficits.

"Instead of actually doing something about high gas prices, our Democratic friends staged what one of my Republican colleagues accurately described as a dog and pony show," said Senate Minority Leader Mitch McConnell, R-Ky. "They rounded up what they believed were a few unsympathetic villains who they could blame for high gas prices, hoping nobody would notice they don't have a plan of their own to deal with them."

A report last week by Congress's Joint Economic Committee said that eliminating or modifying some oil company tax breaks would generate $21 billion to the Treasury over a 10-year period.

Another study, by the nonpartisan Congressional Research Service, said that repealing the tax breaks would be unlikely to lead to high gasoline prices, and that ending them would raise about $1.2 billion in 2012.

As Democrat after Democrat took to the Senate floor to decry the cost of gasoline — $3.94 a gallon Monday for regular unleaded, $4.08 for mid-grade and $4.21 for premium, according to a national survey by AAA — Sen. Landrieu protested. She's a Democrat from the oil-producing state of Louisiana.

She said Menendez's bill wouldn't do anything to reduce gasoline prices and instead would punish companies that provide many American jobs and pay taxes.

"It might make us feel better to beat up on Big Oil," she said. "It might, you know, present a scapegoat in some quarters, but it won't lower prices at the pump, and that's what we need to be about."

Republicans dismissed the bill as a partisan "message vote" called to deflect blame for rising gas prices onto the oil companies.

"This proposal is designed to fail, but in failing it is designed to score some political points, and it seems like that's where we are today," said Sen. Lisa Murkowski, a Republican from oil-producing Alaska. "...We're debating whether or not to give different tax treatment, to essentially punish a handful of companies in just one sector of our economy. And there's no policy justification other than they can afford it. They're making money."